According to data from the State Bank of Vietnam (SBV), credit for the whole economy only increased by 2.06% in the first three months of the year (compared to 5.04% in the same period last year). Interest rate pressure and cautious assessment in lending activities of banks with weaker corporate profiles in the context of slower economic growth were the main reasons for the low credit growth at the beginning of the year. More specifically, in the first 3 months of the year, in priority areas, bank loans for agriculture and rural areas decreased by 0.09%. Meanwhile, credit to risky sectors including real estate increased by 2.19%, of which credit to real estate business increased by 6.45%, for self-use purposes increased by 0.25%. Particularly, credit for investment and securities trading increased the most with 13.39%.

Valuations of bank stocks are generally relatively cheap compared to the past. However, it is necessary to consider investment in the context of the whole economy and factors affecting the short-term business results of banks.
In general, the business picture of banks is expected to be brighter in the second half of the year, raising the better expectations for banking stock investment.
Investors should still aim for banks with good asset quality for long-term investment strategy (SOBs). In addition, it is possible to pay attention to some names benefiting from the credit recovery or policies such as the group of banks participating in restructuring weak credit institutions and may be lifted the foreign ownership limit up to 49%.